IATA delivers gloomy outlook for airline losses

AIRLINES worldwide face severe losses next year if Europe’s politicians fail to get to grips with the region’s debt crisis, the industry’s leading trade group warned yesterday.

The International Air Transport Association (IATA) shaved its main forecast for industry profits to $3.5bn (£2.2bn) for 2012, but said the industry could plunge to an $8.3bn loss with no region of the world exempt if Europe’s debt woes precipitate a new banking crisis.

IATA, whose 240 airlines carry 84 per cent of global traffic, had previously forecast industry profits of $4.9bn in 2012 after estimated profits of $6.9bn this year. The 2011 figure was unchanged from IATA’s previous outlook in September.

“The biggest risk facing airline profitability over the next year is the economic turmoil that would result from a failure of governments to resolve the Eurozone sovereign debt crisis,” said IATA director general Tony Tyler.

IATA groups most of the world’s flag carriers and traditional network airlines such as International Airlines, Lufthansa and Air China, but excludes most low-cost carriers which have generated much of the industry’s traffic growth. However, its forecasts include estimates for low-cost travel.